Someone help me. I’m being bullied by Southwest Airlines.

Actually, a better set of descriptive terms would be pestered, annoyed, or amused, depending on the day.

The source of my discontent is my mailbox. Southwest has sent me a solicitation for its frequent flyer cobrand credit card at least once per month for probably the past 2 years. The mailers are varied in style, size, and color, and each are of high quality. I know the airline is spending significant money on each piece. What’s your guess as a direct marketer? $1? $3?

Whatever the price, it’s all being wasted on me and if they continue to send these mailings, I am going to dig out a receipt for the shredder I recently purchased and send it to them for reimbursement. Their mailers being a big contributor to shortening the lifespan of my shredder, it only seems fair.

In all seriousness, I spend a lot of my time sorting through customer transaction data to create Customer Strategy. When we begin to address how to translate strategy into visible campaigns, we focus on a number of tactical elements, forming a program blueprint for operations. The communications strategy is one key step in the process and I am sincere in attempting to help clients manage their finite marketing budgets to their best advantage. The first step to managing resource allocation is to decide “who” to mail and “what” we should mail to them. There are always value thresholds that trigger certain mailings as well as limits to how much we advise to invest in a specific group of clients.

For instance, if we see a segment of customers attractive to the business on any number of metrics, we’ll test various mailings across the group and measure results. I am pretty doggone sure that if I noticed a segment that I had mailed consistently for more than 1-2 years with no response, I would drop them from the list, at least for a while.

None of what I have just written will surprise an experienced direct marketer. Why then does Southwest continue to mail and mail and mail?

Don’t get me wrong. I’ve come to like the airline and its in-flight experience. And their recently re-launched Rapid Rewards program was extremely well communicated via email and print mail.

Southwest is doing some things well, but inexplicably is impacting my impression of its brand with these non-stop credit card solicitations. Maybe the answer is that their bank partner is driving the mailings, and the partner’s desire for new cards outweighs any concerns about customer experience.

Cobrand relationships carry inherent conflict of interest and must be carefully managed. The bank’s desire for new cards can negatively impact customer impressions of the airline itself. Most consumers will only notice the Southwest branding all over the envelope. The bank’s name is relegated to fine print inside the envelope.

Given this scenario, who do you think stands to gain most from mailing me to death, and who is really taking the risk from a branding perspective? Personally, I would like to be removed from their list and have Southwest award me Rapid Rewards points in exchange for all the money they will save on me.

As Paul Harvey says “now you know the rest of the story”.

What do you do when you have a solution in your hand in search of a problem?

If you’re the creator of the solution, you sell, sell, sell, crafting magnificent stories describing the power of your solution to change lives and create profits. That approach is mandated by fiduciary responsibility to those investors who brought your solution to market. The effort and persistence are admirable, but in time the substance of your solution will come clear, as will the reality of market demand for that which you are selling.

There are lots of examples of solutions seeking problems to solve. At the moment, contactless payment, many online reward applications, and almost every piece of exercise equipment sold through infomercials come to mind. One exception in the exercise category is TRX, which I’ve used and think is worth every penny.

I’m also thinking of QR codes.

I’ve written about QR codes before, highlighting the digital curiosity they can create and some practical uses they can provide to connect local merchants to their customers and enhance the value of print media at a time when it is teetering on the edge of destruction.

American Airlines seems to agree with my take, as the envelope I received this month with my AAdvantage frequent flyer status inside carried a big fat QR code on the back. If you own a smartphone and have just a wee bit of marketing curiosity in your blood, I don’t know how you could not click through the code.

I did and it took me to a landing page online which featured special fares and offers that American Airlines is promoting at this time. It took me all of 30 seconds to look at the offers and, while it wasn’t for me this time, I would check back for future offers if presented in the same way.

American’s use of the QR code is a practical example of how to create customer engagement and how to reap a little better return out of every piece of direct mail stuffed in the box. After all, there was nothing but white space on the envelope before this QR experiment, and the ROI calculation must be astronomical as the denominator (cost) is minuscule.

While solution sellers carry on with big promises, brands and marketers are wise to sit back and determine how they can put new technologies to use to meet their own needs. Often the answer is not the one being sold by the creator of the solution.

Some new technologies won’t survive your next brainstorming session. Others, like the QR code, can be selectively used to create customer engagement and help create incremental revenues.

Everyone knows that the air travel experience isn’t what is used to be. My recent trip around the world in 5 days served to accentuate the contrast of today’s reality with more elegant days past, while reminding me of solutions that remain untapped by the airlines to improve their standing with frequent flyers.

Some aspects of the air travel experience are so egregious that even the most generous frequent flyer program can’t overcome the problems. My opinion is that the airlines must embrace change, or risk permanently relegating their valued frequent flyer programs (FFP) to a commodity status.

The issue of airline profitability has to be front and center in this discussion. Since the bottom of the most recent airline industry economic cycle, the airlines have continued to homogenize their fleets, moving to more efficient airframes. Schedules have been set to meet demand with a thin margin of error, meaning that nearly every flight one takes these days is fully loaded. Labor agreements have been renegotiated by the majors, and lower cost entrants started out with more advantageous compensation models. Mergers have taken place with collapsing hubs wringing new efficiencies out of the network. Fuel remains a variable expense that is difficult to control, but whose impact on profitability is smartly managed by airline managers with forward purchases and hedged contracts.

The sum impact of the profitability discussion should mean that if the current generation of airline managers are truly competent, then the core issues of profitability should be accounted for and it should not be pilots, flight attendants, customers, and FFP’s themselves that are penalized each time the airline misses its financial projections.

Some ready examples of how the flying experience has degraded include:

1. The in-flight experience has been deconstructed in search of “ancillary revenue” at multiple touch points, most of the changes coming at the expense of the customer. Baggage charges, early check-in fees, “extra leg room” seat charges, and the near elimination of free food and beverage are familiar pain points to those who fly often.
2. Changes to the management of the “standby list” at airports have resulted in irrational policies that frustrates flyers. During an exhausting trip to Malaysia and back, I was denied boarding on two flights that would have saved me 5-6 hours of travel time, all because my FFP status with the airline didn’t merit this “privilege”. Both flights left with over 30 empty seats.
3. The need to implement Enterprise Engagement Strategy across major US airlines is clear. Somehow, the financial struggles of the airlines has trickled down to cabin crews such that these otherwise kind people approach cabin service in a near-adversarial manner. On code-shared flights from Miami – Kuala Lumpur and return, the legs operated by the foreign carrier partners were full of smiles, great service, and helpful attitudes. Sadly, the legs operated on US airlines were characterized by a generally surly atmosphere.

There is a corresponding list of solutions that are easily within grasp of the airlines to execute:

1. If the airlines would use their data, as complete a customer data set as any industry outside of banking, to link lifetime value and previous FFP status to customer records, it could support customer service decisioning and create the opportunity for customer delight. Lifetime FFP miles, an indication of past patronage, are known and previous tier achievements can be remembered (Gold, Platinum, etc.). Airlines could use these simple indicators to make occasional exceptions to care for valuable business flyers, regardless of their current status. As we all know, the flow of business drives who and where we fly, and a person can become more valuable upon signing of the next long term client contract.
2. Avoid the temptation to monetize every step of the flight experience. Just like financial people who can ruin points-based loyalty programs by falling too much in love with breakage, fees, and by tinkering with redemption levels, airline managers must return to a more bundled experience. Give a little, earn a lot.
3. Include cabin and ground crews in the magic of creating a memorable flying experience. Give counter and flight attendants a reason to smile, and help all associates remember that the people in the seats really are paying the bills. This might be the most powerful suggestion in this list, and successful achievement of the objective is more a matter of will than anything else.

I’m not an airline basher by nature. I spent 10 years as a supplier of components to commercial airlines and have family members with entire careers piloting passengers around the world. I am pulling for the airlines to “up their game” by recalibrating their interest in ancillary revenue and cost-cutting with the in-flight experience.

There is a happier balance that can be struck for all parties. If that balance can be achieved, then FFP’s can be better used to truly influence airline choice.

Breakage is the classic crutch of loyalty marketing financial models. As I mentioned here in a recent post, attitudes towards breakage are changing, both from perspective of the loyalty supplier community and consumers.

Brands aren’t missing the boat on breakage, in fact recent moves by Delta Airlines and Points.com over the past two weeks signal additional recognition that the accrued value in loyalty programs is not a ’shiny object” to tease consumers with, rather it is truly an alternate currency that people expect to have liquidity and be able to convert for value.

Points.com announced that it is teaming up with Paypal to allow its Aeroplan® miles, American Airlines AAdvantage Miles® and US Airways® Dividend Miles® to convert into cash in member’s PayPal accounts. It’s one thing to flush your points for questionable value in the form of magazine subscriptions. I’m sorry, but I just don’t call that a good value proposition for most people.

It’s quite another matter to be able to convert miles into cash. In concept it’s a great enhancement for Points.com and a boon for PayPal. The crucial driver of success for the tactic will be the exchange rate set between the two currencies. At this point I’m not privy to the exact exchange rate but understand it will be distinct for each airline. Some consumers are already crying about lack of value and we’ll have to keep a watchful eye here. On the surface, it’s a great idea.

Frequent Flyers didn’t fare badly this week either. Delta Airlines announced that mileage no long expires in its SkyMiles frequent flyer program. This change could be viewed in two ways. The skeptic will contend that infinitely available miles will just make a seat capacity problem that frustrates most frequent flyers even worse. Additionally, it might seem to represent another step in making FFP’s tougher for the airlines to manage from a financial standpoint.

The optimist will opine that eliminating mileage expiration will spark brand affinity for Delta in the short term and, if combined with some additional redemption options (can Delta play in the PayPal arrangement or come up with some other ideas?) will increase customer engagement over a longer term.

I’ll weigh in as an optimist. With our estimates of Consumer 2.0 at or near 150 Million US consumers, brands that shift the emphasis of their rewards programs from breakage to engagement will come out on top. Consumer 2.0 wants attainable rewards on a more liquid basis. Conversion to cash through Social Shopping, redemption at point-of-sale, and Social Giving are all options that this group finds attractive.

It’s good for the industry and for the consumer when we witness brands encouraging engagement rather than hoping for breakage.

I’m sensing a tipping point in how customers relate to loyalty program rewards, and my thinking goes like this: when customers choose which company to do business with, rewards just don’t matter like they used to.

My take is that the classic loyalty reward scheme—earning points toward “hard” rewards for repeatedly doing business with a company—has been trumped by the customer experience. In other words, today’s customer is more likely to opt for a better experience today, than accept a lesser experience that pays dividends down the road.

Lets start with a personal example. I recently cleaned out my wallet of old business and program membership cards. There, I found reward cards for both Borders and Barnes & Noble. Now, I know I have points in both of these programs, but I haven’t engaged with either brand for years. Why? I’ve given all my business to Amazon, which for me offers a better customer experience.

A recent blog by marketing guru Seth Godin points anecdotally to a similar trend toward “experience over rewards” happening in the airline industry. Godin believes that the greater the risk involved with getting a reward—one we have to save for and may never use—the less we value it.

He writes:

Frequent flyer miles, for example, began with the promise that if you flew an airline regularly for months (or even years) you’d get a free flight. The airlines oversold the miles and undelivered on the free flights, though, so the reward started to lose its perceived value—too much risk that you wouldn’t get the prize you wanted. Many of the frequent flyers I know have ceased to ’save up’ and now use their miles for upgrades, moving the benefit closer in time.

Godin’s point is backed up by a recent article in the Miami Herald titled: “Are loyalty programs worth it?” Travel writer Christopher Elliott cites several real-life examples of customers leaving airline programs, because the rewards are just too hard to earn. He points to a recent stat that seat requests for USAir reward flights had an availability rate of 10% and muses, no wonder “there are several trillion unredeemed miles floating around out there”.

In another sign of the sea change, several companies are now offering customers “loyalty rewards” with no points, or long-term loyalty, needed. Take the telecomm space, where both Verizon and Optimum have recently launched reward programs with merchant discounts, special promotions and exclusive content—with no strings attached. Prove you’re a customer and you’re in.

Why is the trend moving toward more automatic and instantaneous recognition of customers? Godin attributes the change to the Internet, stating “one of the many things the web is changing is our focus on now”. I see his point. Now more than ever, today’s consumer wants things at the speed of the Internet, whether it’s information, customer service—or a perk for being a customer.

Is this the beginning of the end of long-term loyalty rewards?

The floor is open. What do you think?

Patrick Sojka knows credit cards, travel rewards cards in Canada to be precise. As CEO & Founder of Rewards Canada, he’s been cataloging and ranking the myriad of offers in the Canadian market to help consumers find the best deals for their wallets and their loyalty points banks since 2001.

If you think Americans are reward-crazy, our Canadian friends are just a bit out in front.  You’ve probably read the oft-quoted finding from Colloquy that the average American household is a member of 14 loyalty programs, but active in only 6. RewardsCanada.ca, considered to be Canada’s premier frequent flyer and travel rewards resource, has chimed in to share that “more Canadians per capita participate in loyalty programs then any other country and a large portion of the loyalty market is comprised of travel rewards credit cards”.

No matter the numbers, it’s clear that consumers in both markets have almost too many choices, and are seeking clear and unbiased advice to make the right selection to meet their needs.

To help consumers fight their way through the noise, Rewards Canada just announced a new tool, the Travel Rewards Credit Card Flow Chart. “When used with our other credit card features, the flow chart guides the consumer to narrowing down the choice for a new travel rewards credit card” added Patrick.

The flow chart is the latest in a string of articles and charts aimed at helping Canadian consumers choose the right travel rewards credit card for them, including a newly released list of Canada’s Top Travel Rewards Cards for 2010. You can find the rest of the resources, updated on a daily basis, along with news, articles, program information and bonus offers for over 80 travel reward programs at the RewardsCanada.ca website.

Steven Slater is a blogger’s dream. For anyone looking for that quirky story to opine about, Mr. Slater provided a remarkable set of actions that will earn him a bit more than 15 minutes of fame. In fact, I’ll bet the incident that took place this week on Jet Blue flight 1052 from Pittsburgh to JFK will be cited in serious business circles over the next year as some form of turning point in improving the commercial airline travel experience.

Let’s be clear. It is not acceptable for a customer facing employee, whether flight attendant, service write-up person, or cashier to lose control and address others with anger and profanity. The world is a frustrating place but my Dad used to remind me “the veneer of civilization is paper thin”. In other words, we have to maintain control no matter the circumstances.

On the other hand, flying commercially is becoming more tortuous by the day. The restrictions that the airlines deem necessary negatively impact the flight experience and, rather than the intended compliance, are bringing out the worst in many people.

It seems the more travelers are charged for things that used to be free and the less freedoms we enjoy in flight, the more rebellious that paying customers seem to become. Our sense of entitlement is being threatened and we don’t like it. The offending passenger on Mr. Slater’s flight, by all reports, was truly offensive and anyone of us that endures business travel can attest to the selfish, rude, and flat out ignorant behaviour displayed by many passengers these days.

Toddlers learn quickly that ignoring rules and responding with extreme petulance draws further punishment. Mr. Slater executed his own version of a smack down and essentially threw his entire flight into “time out”. Not good, but he certainly delivered his message.

In my opinion, the airlines could defuse frustration for all parties on board simply through improved communications.

I have always wondered if using my cell phone in flight “really” impacts flight operations. Now it seems that placing your mobile device in airplane mode is not enough as we are constantly reminded to “turn everything with an on/off switch into the off position”. I guess Apple wasted its time designing that feature for its iPhone.  Posting simple explanations of policies that impact passengers would go a long way to soothing flyer nerves.

The biggest opportunity for airlines to create goodwill with their customers is to make compliance with TSA’s Secure Flight Program a breeze. If you are not familiar with the requirements of Secure Flight, read here.

I have received notice of my need to comply from several airlines via emails and in newsletters. JetBlue published a link in an email addressing the topic but I challenge you to find further reference to the topic on their website. Delta currently requires passengers to change the name of their SkyMiles accounts in writing and to provide “legal documents” as support.

I’d rather send them my legal name that matches my passport and redeem 10,000 miles for them to make the change, not that they would ever consider making it this easy.

Neither prosecuting Mr. Slater nor further clamping down on passengers will yield good results for the airlines as a group. Giving more thought to communicating the reasons behind in-flight requirements and making it easy for loyal frequent flyers to comply with new TSA regulations would not only serve as damage control, but represent steps towards restoring civility in commercial air travel.

There’s an App for all this: it’s called social media. Why don’t the airlines considering using it to communicate with their valued customers?

I just signed up for the Virgin Atlantic loyalty program called the Flying Club. I have no immediate plans to fly on the airline. Nor do I really need another frequent flyer card, as I’ve got miles banked in three or four programs now.

The reason I joined the club is I just finished reading Business Stripped Bare, Adventures of a Global Entrepreneur, the new book by Virgin-owner Richard Branson. I’ve come away impressed with Branson’s business acumen, his marketing skills, as well as his infectious joie de vivre.

I mean here’s a guy who started in the record business and has since branched out into mobile phones via Virgin Mobile, financial services, health clubs, bio-fuel, stem cell research, health-care and even space travel with Virgin Galactic. His brand, and passion for business, truly knows no boundaries.

But, getting back to Virgin Atlantic, what might be most impressive is how he has keyed into the customer experience as the crucial element of continued loyalty. Sure, Virgin has a traditional air miles program, but Branson identified several areas he believed would offer a better onboard experience, and delivered on them.

These features, some since copied by competitors, include:

• The ability to order food from your seat on-demand, according to your schedule, not the flight attendant
• A vast choice of music and movie options, delivered to a personal entertainment screen at your seat
• Seat-to-seat chatting with friends, colleagues or the attractive woman in 9B, via an entertainment screen keyboard
• Custom designed “soothing” lighting and comfy seats

It’s a reminder that true customer loyalty is never achieved by points programs and perks alone—you also need to deliver a superior customer experience. It’s something Branson strives for across all his business lines, and has me hoping I can find an excuse to fly Virgin Atlantic soon.

Air travel has changed from an exciting and privileged experience to something considerably less elegant. Leisure travelers absorb the shock from ever-changing TSA procedures at security checkpoints, and unknowingly contribute to the woes of their fellow travelers when they board loaded down with enough bags to make the Beverly Hillbillies look like minimalists.

For the business traveler sitting across the aisle, aspirations of time efficiency and comfort are placed on a 3 hour hold each trip as seat pitch has become so tight that only a notebook computer will open up comfortably in flight.

Corporate travel is increasingly driven by economics, and many flyers who used to hold out for a legacy carrier to fly in familiar circumstances and collect more frequent flyer miles are now abdicating “loyalty to the livery” and accepting the best combination of schedule and price – period.

There is a lot of talk among airlines and consumers about how to improve the air travel experience, and last week Spirit Airlines took a bold step towards “improving” the situation by announcing it would impose baggage fees – not for checked bags – but for bags carried on with intent to be placed in the overhead bins as of August 1.

Ben Baldanza, Spirit’s President, has been making the media rounds defending his airline’s new policy. Advancing a questionable argument, he has been rationalizing the new policy saying that consumers will actual save money on a net basis because Spirit’s fares are being reduced, and that 5 minutes saved in more efficient boarding  of aircraft accumulated over a 24 hour period will save 20 hours of airplane time per day – the equivalent of having two extra $40Million planes in the fleet. If that isn’t fuzzy math, then I don’t understand the concept.

Spirit’s new baggage policy has its foundation in operational efficiency as do many similar airline policies. The trouble is, they seem to have forgotten about the customer in the process. Between the new baggage policy and the recent announcement of its “pre-reclined seats”, Spirit is either focusing ever more narrowly on its target market, or is outsmarting itself one new policy at a time.

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Spirit may be wiser than we think. They are a price-driven airline appearing to cater to the leisure traveler. It is possible that they have abandoned all thought of courting the business traveler, and are moving ahead with new policies to further strengthen its position in its chosen market.

Spirit’s promotional marketing strategy is oriented to the leisure flyer. In a recent survey of email communications used by loyalty program sponsors, Hanifin Loyalty found that Spirit was the single most prolific sender of email among 22 companies studied, with an average of 14.77 emails per month. With almost zero evidence of behavioral triggers in its email flow, Spirit uses edgy messaging to tout low prices in over 96% of its emails.

In my view, there can only be one low price leader per category. In retail it remains Walmart, and in air travel, it could be Spirit. There is risk to this strategy, and cracks have appeared in Walmart’s low-price strategy recently as consumers are questioning if in fact they offer the lowest prices around. There are several discussions on Retail Wire on the topic and here is a link to one of them. The warning is that once a company is positioned as the low price leader, they have little to cushion their fall should they lose the advantage as customer experience and quality are often perceived to be below the competition.

Time will tell if Spirit has made the right moves and, while the market decides, my vote is for the regulators to stay out of it.

I believe that many business travelers will resist these changes and avoid Spirit or any other airline who adopts similar policies for two big reasons – checking a bag limits the ability to make changes to an itinerary on the day of travel and costs business travelers precious time once landed at a destination.

Spirit has the right to choose its course, as do we in the frequent flyer population.

What do you think?

I am a frequent flyer of Delta Airlines and have a Marriott credit card and enjoy the benefits that I get from using both companies (I like free flights and frequent flyer miles). I just booked a “free” vacation using both vendors and feel pretty good about my loyalty to them, and their loyalty back.

Loyalty is built based on consumer relationships as they are rewarded for their long term relations with a company. Loyalty programs are supposed to be used to benefit long term value and reduce retention, but has the apple cart begun to spoil?

Is loyalty becoming nothing more than a price match war as we see every day in the marketing world?

I recently was introduced to a few web sites that are a bit troublesome: Flyertalk.com and Statusmatcher.com:

• Flyer talk is filled with frequent flyer users and you can actually learn many good points and tips when it comes to traveling.
• Both Statusmatcher and Flyertalk also show you how easy it is to call up other vendors and receive the same status level that it took you some time to earn through your dedication to those very same companies.

For example, I am a Delta Gold Medallion customer-here is an example of what statusmatcher will do when you go to their site:

Delta Gold to United Airlines Premier Executive

Fax to United a copy of your Delta statement, a copy of your membership card, and a description of the status you would like (Premier Executive).

Contact Name: Mileage Plus Customer Service
Phone: 1-800-421-4655
Fax: 605-341-6140

Bingo! It is as easy as that! Send a fax over to United and boom, same status. Where is the loyalty for me in flying Delta versus someone who flies United or vice versa and simply becomes a Premier or Gold customer? Are we going to see dedicated flyers bumped if their status isn’t as high as someone who only flies the airlines only some of the time?

Here is another example:

Marriott Silver to Hyatt Platinum

Sign up for the Hyatt Gold Passport program online. Fax the following information to Hyatt (see above number): Gold Passport Number, Marriott statement showing 10 stays and Silver status.

Contact Name: Gold Passport
Phone: 800-228-3360
Fax: 402-593-9449

How much are these programs devalued when it is so easy to get the goods so easily at competitors? It will be interesting to see how these programs evolve in the near future.

Editor’s note: LOTS!